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Demand and Supply GAP Analysis of BrightestLEE (Scented Organic Repellant Candle)

A Demand & Supply Gap Analysis Presented to theFaculty of the College of Business Administration and Accountancy Colegio de San Juan de Letran Intramuros, Manila

In Partial Fulfillment of the Requirements for Econ102 Basic Microeconomics

LEE, Michael MERCADO, Gilbert

October 2012

Table of Contents Page 1.1 Name of the Firm 1.2 Location 10 15

LIST OF TABLES

Page

Table 1. Market Survey Results Table 2. Distribution of Tasks and Responsibilities

10 15

BrightestLee
(Scented Organic Repellant Candle)

1.1Name of the Firm BrightestLee is the name of the proposed business. It came into light as the proponents brainstormed for a project enterprise as a requirement of their course. Bright and wild ideas popped up but the name BrightestLee was chosen as suggested by Mr. Michael Lee, one of the proponents. The name vocalizes inquisitiveness, versatility and uniqueness. The proposed enterprise offers best scented candles that surely appeal to the interest of the prospective consumers. 1.2 Location BrightestLee is located at 72A K-5 Judge Jimenez, Kamuning, Quezon City. The proponents find the right place to promote and sell the product as it intends to capture the household market. The head office and the plant occupy the same place in the District 4 of Quezon City. The plant size is 30 square meters which is considered sufficient to operate the business.

72A K-5th Kamuning, Q.C.

Figure 3. Business Location

1.3Description of the Product The product is organic mosquito repellant candle. It is an eco-friendly, natural candle made of 100% pure green vegetable palm wax and soy wax blended with neem extracts and essential oils. These materials are all sustainable and kind to the environment and living organism as well..

Figure 1. BrightestLee Organic Scented Candles BrightestLee Candle is a scented repellant candle that promises every household to prevent insects that cause different types of diseases particularly mosquitoes and secure every member of the familys health. It is an environmental friendly candle which organic because of its components. This product can also be used for decoration and air freshener in any home. 1.4 Methodology This study uses both primary and secondary data. In collecting the supply data, the proponents conducted an interview to the two direct competitors identified of the proposed business. These are Natures Garden Scented Citronella Candle and Domus Lucis Citronella Candle. A survey was conducted on the intended target market who is the residents of Kamuning, Quezon City. These respondents were determined using the sample size calculator at SurveySystem.com. There were 100 respondents selected randomly using a 95% confidence level and 9.6 confidence interval. The questionnaire used in the survey was designed by the proponents to determine the respondents opinion, attitude towards the product, and buying preferences. The questionnaire has close-ended questions, wherein the respondents are asked to place a check mark on the space provided for the answer they choose. Most of the close-ended questions are in multiple choices, while others are answerable by yes or no. In determining the historical demand and the projected supply, a straight-line method was employed.

1.5 Demand This establishes the prospective customers of BrightestLEE. These are residents of Kamuning, Q.C who are willing to try an organic repellant candles and their frequency of buying. 1.5.1 Consumption for the Past Three Years Table 1. Consumption of Scented Repellant Candles for the Past Three Years
Year 2008 2009 2010 Population 426,854 434,973 443,246 Historical Demand (per piece) 5,270,195 5,372,377 5,476,541

Table 1 shows the historical demand of scented repellant candles Kamuning, Q.C. for the past three years. The historical demand was computed using the 2007 census population of NSO. The population of District 4, Q.C for 2007 was 418,887 residents with a growth rate of 1.902 percent. Based on the survey conducted to the target market, the willingness of the respondents to buy the product and their frequency of buying were multiply to the population with the growth of the area used for the projection. (See Appendix A for the detailed computation). 1.5.2 Target Market

The major consumers of BrightestLee are the residents of Kamuning area in District 4, Quezon City. These are the households who wants to protect their family from insect related diseases particularly mosquitoes.

1.5.3

Projected Demand Table 2. Projected Demand of Scented Repellant Candles for the Next Three Years
Year 2012 2013 2014 Population 460,268 469,022 477,943 Projected Demand (per piece) 5,688,908 5,797,111 5,907,372

For the projected demand in Table 2, the proponents utilizes the straight-line method with the population growth rate of 1.902 percent of District 4, Q.C for the next three years.

1.6 Supply 1.6.1 Supply for the Past Years Table 3. Supply of Scented Repellant Candles for the Past Three Years
Natures Garden Citronella Scented Candle 217,634 221,854 226,155 Domus Lucis Citronella Candle 142,518 145,282 148,099 Historical Supply (per piece) 360,152 367,135 374,254

Year 2008 2009 2010

Table 3 presents the supply of scented repellant candles at Kamuning, Q.C. for the past three years. There are two direct competitors of the proposed business. These are the Natures Garden and Domus Lucis which are both selling citronella scented candles. Using the July 2011 data of their sales and the interview conducted by the proponents to the respective competitors, both competitors have annual increased in their sales of 10 percent over the past years. (See Appendix A for the computation)

1.6.2

Projected Supply Table 4. Projected Supply of Scented Repellant Candles for the Next Three Years
Natures Garden Citronella Scented Candle 253,594 278,953 306,849 Domus Lucis Citronella Candle 166,067 182,674 200,941 Projected Supply (per piece) 419,661 461,627 507,790

Year 2012 2013 2014

With the 10 percent increased in sales of both competitors, the total projected supply is presented in Table 4 for the next three years (See Appendix A for computation). The above table reveals that Natures Garden is the market leader when it comes to scented repellant candles. 1.7 Demand and Supply Analysis Table 5. Demand and Supply Gap Analysis

Year 2012 2013 2014

Projected Demand (per piece) 5,688,908 5,797,111 5,907,372

Projected Supply (per piece) 419,661 461,627 507,790

Demand & Supply GAP (per piece) 5,269,247 5,335,484 5,399,582

Table 5 illustrates the demand and supply gap analysis of scented repellant candles at Kamuning, Q.C. for the next three years. This shows that the present market is not fully satisfied by the existing competitors around the area. This gap is accounted for 93 percent of the projected demand. Realizing this opportunity, the proponents are proposing of scented repellant candles made out of neem extracts and oil.

1.8 Projected Sales Table 6. Projected Sales of Scented Repellant Candles for the Next Three Years
Demand & Supply GAP (per piece) 5,269,247 5,335,484 5,399,582 Projected Sales (per piece) 52,692 106,710 161,987

Year 2012 2013 2014

Market Share 1% 2% 3%

Table 6 demonstrates the projected sales of BrightestLee in the next three years. Using the past years sales data of the competitors, the proposed business has assumed a 1% market share for 2012 to project the sales since it is a new entrant in the market. Employing the proposed marketing strategies and program, the business is expected to increase its market share by 2% and 3% for 2013 and 2014 respectively considering BrightestLee is a small scale enterprise. 1.9The Brand

Figure 2. BrightestLee Logo The partners came up with the idea of BrightestLee Candle. This epitomizes inquisitiveness, versatility and uniqueness of the product. and the bond of their business friendship. BrightestLee offers different types of designs, shapes, and scents of candles. The three circles of the logo represents the three proponents

. 1.9.1 Price

Table 7. Prices of Scented Repellant Candle


Company BrightestLee Candle Natures Garden Citronella Scented Candle Domus Lucis Citronella Candle Price (in Php) 70 150 250 120 150

1.9.2 Place of Distribution

72A K-5th Kamuning, Q.C.

Figure 3. Business Location

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